EP and the EU Presidency have reached agreement on the proposal for a Regulation on Short Selling and Credit Default Swaps (CDSs). The EP negotiators were pleased to achieve a ban on naked CDS trading (buying default insurance contracts without owning the related bonds), with only a limited option for national regulators to lift the ban temporarily in cases where its sovereign debt market is no longer functioning properly. MEPs also argued successfully for ESMA to keep its powers to restrict short selling and decide whether national regulators’ decisions to impose temporary bans are reasonable. The final major change is an improvement in information disclosures. MEPs did not succeed in having all naked short selling banned for more than one day. The Regulation now needs final adoption by EP and the Council. EP should adopt it in the third week of November 2011, and the Regulation is expected to enter into force in November 2012. (Source: EP Pleased with CDS Agreement)